Chartbook: India electricity and coal
But domestic mines and the rail network are struggling to keep pace with the strong demand from power producers for fuel. Mine production and coal trains despatched to power plants both increased last year by 12%, which was impressive but still below generators’ requirements. India’s railways loaded an average of 271 coal trains per day bound for power producers in February, well below the plan for 313 trains, and no higher than in February 2022. The rail system is becoming a binding constraint on the ability to move more coal to generators and ensure they have sufficient fuel. Generators’ stocks are currently equivalent to 12 days of consumption, an improvement on this time last year (9 days) but below the corresponding levels in 2021 (15 days), 2020 (28 days) and 2019 (18 days). To stretch supplies further, the government has directed generators to import more coal to be blend with domestic production (“India to boost coal imports to cope with harsh weather, freight snags", Reuters, January 17, 2023). The government has also ordered privately owned generators that rely on expensive imported coal to maximise output to relieve power shortages (“India to use emergency law to maximise coal power output”, Reuters, January 30). The massive deployment of renewable generation has helped prevent far worse shortages but the total is still too small to relieve the pressure on the coal system. Coal-fired generators supplied 76% of all electricity to the transmission network in February despite the rapid deployment of wind turbines and solar panels. Renewable capacity increased by 15% in January 2023 compared with a year earlier, and there were even more impressive increases in actual generation from wind (50%) and solar (+37%). Coal-fired generation becomes even more stretched in the pre-monsoon season (March-May) and post-monsoon (September-October) when temperatures are higher but wind, solar and hydro output are not at their summer monsoon peak. In the medium term, the government anticipates renewables deployment will stabilise and then reduce the need for coal. But that goal is still some years away. In the meantime, increasing domestic production and imports, and critically relieving bottlenecks at ports and on the rail network, is essential for avoiding widespread electricity shortages.
Related columns: - India’s low coal stocks threaten electricity supply (January 27, 2023) - India’s coal and electricity supplies are more comfortable this autumn (September 28, 2022) - India coal stocks under pressure owing to rail bottlenecks (May 12, 2022) - Beset by coal shortages, India's power grid struggles to meet demand (October 12, 2021)
John Kemp is a Reuters market analyst. The views expressed are his own (Editing by Mark Potter)
